Tuesday, January 19, 2016

Uniqueness claim can be falsifiable

Fuel dispensing filters are designed to detect and remove
water from fuel before fuel is dispensed into a vehicle. Champion and CIMCO are
the leading competitors in the market for fuel dispensing filters in the United
States. Champion sued CIMCO for false advertising, and CIMCO counterclaimed for
false advertising. Here, the court
dismissed some counterclaims and allowed some to proceed.

The first challenged claim was on Champion’s website: “Only
PetroClear filters are rigorously tested in the world’s most extensive
dispenser-filter research-and-development facility.” CIMCO argued that no
industry-recognized organization, group or association had confirmed this
claim, while CIMCO’s filters “have been tested and recognized by an independent
or third party facility, Underwriters Laboratories.” Champion argued that its claim was
puffery.However, given the relevant
market and the detail in the statement, the claim didn’t warrant
dismissal.Because UL does test filters,
“purchasers might misunderstand Champion Laboratories’ statement … as
trumpeting accolades it received from a third-party or independent organization
for PetroClear filters.”

Second claim: Champion stated that an independent testing
lab, Southwest Research Institute, found that PetroClear filters “stop” the
flow of contaminated fuel when, CIMCO alleged, the lab only found that
PetroClear filters “slow” the flow of contaminated fuel. Champion made the statements in a video on its
website, a May 2006 advertisement in National Petroleum News and, a 2009
presentation to the Petroleum Equipment Institute. Borrowing the 3-year limitations period from
the analogous state statute, the Illinois Consumer Fraud and Deceptive Business
Practices Act, the court found that the continuing violation doctrine
nonetheless rendered the claim actionable, at least on the present factual
record.The related laches defense was
not amenable to resolution on a motion to dismiss.

Third claim: An email addressed to “Gilbarco and Wayne
Authorized Distributors in Latin America,” repeated the “stop flow” statement
and made other allegedly false claims. Champion argued that this email,
directed to distributors in Latin America, didn’t trigger the Lanham Act or the
Illinois Deceptive Trade Practices Act. (Under the Illinois Deceptive Trade Practices Act,
the circumstances that relate to the disputed transaction must occur “primarily
and substantially in Illinois.”) The
court granted the motion to dismiss because CIMCO didn’t show any effect on US
commerce. There was no allegation that the allegedly false statement affected
sales anywhere in the United States or its territories, or that CIMCO suffered
injury in the United States market.

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